5/04/2001 @ 7:00AM

Pro Forum: Linda Killian, IPO Expert

Investors may be regaining their appetite for initial public offerings now that the Nasdaq Composite is signaling an upturn. Three new issues were priced this week and more are on the way, says
Linda
Killian
Linda Killian
of
Renaissance Capital
in Greenwich, Conn.

Killian is a portfolio manager for Renaissance’s IPO Plus Fund, and she co-authored the recently published book, IPOs for Everyone: The 12 Secrets of Investing in IPOs.

Forbes.com: The market for new issues has been moribund since the fall. Does the increased activity this week really mean that IPOs are back?

Killian: The IPO window is reopening after a long drought. And it’s reopening with a much more diverse group of companies than we saw in 1999 and 2000. It is not dominated by profitless Internet and technology companies.

This week’s hottest deal involved Reliant Resources, which sold 52 million shares at $30 apiece to raise $1.5 billion. What was the attraction for investors?

Reliant is an unregulated power provider. These companies sell power to electric utilities. The energy companies have been doing well and we would expect to see more of the unregulated power companies come to market.

A decade ago there was a lot of enthusiasm for biotech IPOs. Now that the human genome has been sequenced, do you expect more new issues in this sector?

We see a real similarity between 1991 and today in terms of the types of companies that are going public. Now we are at the beginning of another major wave of drug development.

A software company, Simplex Solutions, was among the three firms that went public this week. Will the tech sector contribute to the IPO rebound?

There is definitely life in that area, there’s no question about it. But the standards by which young [tech] companies are being judged have gotten stiffer.

The U.S. Securities and Exchange Commission is probing the way Wall Street firms distribute IPO shares to favored institutional clients. What will be the impact?

The investigation may create a lot of pain for the underwriters but, ultimately, what the SEC wants to accomplish is to have a fair market. To the extent that the SEC’s current activity results in a fairer distribution of IPOs, then so much the better.